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Market Recap: Financials Gain Despite Credit Jitters, Markets Fall Again

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Despite another day of credit jitters, Financials gain. But the rest of the markets were left in the dust.

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A late-day sell-off forced major indexes to close at the lowest levels of the day. The Dow Industrials fell –225 points, or –1.7% to 13041, the S&P 500 fell –21 points, or –1.45% to 1453, and the Nasdaq Composite fell –68 points, or –2.52% to 2627.

The markets started on sour footing for another day as news of Wachovia (WB) made headlines. The nation's fourth-largest bank disclosed total losses from recent market turmoil for the third quarter at $1.3 bln, but warned investors of further valuation losses ahead. Further compounding the selling pressures was news of a collateralized debt obligation managed by State Street Corp (STT) liquidating assets and prompting S&P to slash the investment vehicle's rating. Professor Depew noted on the Buzz the importance of the event because of the implications of risk aversion by the investors. Yet despite all the negativity, many financial stocks closed in positive territories. Although STT fell –3.65%, WB shares closed up +0.87%, Morgan Stanley (MS) finished up +0.97%. Citigroup (C) reached its first higher high for the first time this month closing +0.61%. For more, read Professor Depew's Five Things You Need To Know.

Tech stocks extended their declines for the week with an exaggerated sell-off prior to the closing bell. Recent high fliers were the hardest hit. Apple (AAPL) fell –5.8%, Research in Motion (RIMM) fell –9.0%, and Baidu (BIDU) fell –4.5%. Even with the declines Professor Macke noted some of the stocks were becoming interesting with Microsoft (MSFT) below $33 and Intel (INTC) below $25. Another notable stock was EMC Corp (EMC). Although the stock closed –3.68%, Professor Zucchi and Professor Udall reaffirmed their bullish sentiment on the Buzz. Professor Adami also mentioned it favorably in EMC Cashes In On Growing IT Storage Needs.

In other news, Merck (MRK) shares rose after the company announced it was settling all claims relating to its withdrawn Vioxx pain killer for about $4.85 bln. Wall Street applauded the move sending its shares to close +2.0%. For more, read our biotech-specialist Professor Miller's article, Biotech Roundup.

In commodities crude oil gained +0.86 to 96.32. Gold settled lower by –2.80 to 834.70, and Silver added +0.03 to 15.545. Copper fell –5.85 to 314.55.

For more summaries, click on Minyanville's Buzz Bits.


Earnings Review:

  • Fannie Mae (FNM) reports 1Q $1.17 EPS, may not be comparable to $0.77 cons on revs $2.51 bln vs. $2.24 bln cons.
  • Goldcorp (GG) reports $0.12 EPS vs. $0.16 cons on revs $2.48 bln vs. $2.22 bln cons.
  • JA Solar (JASO) reports $0.47 EPS vs. $0.35 cons on revs $113 mln vs. $98.4 mln cons.
  • Pacific Ethanol (PEIX) reports -$0.15 EPS vs. $0.00 cons on revs $118 mln vs. $105 mln cons.
  • Sotheyby's (BID) reports $0.61 EPS vs. $0.62 cons on revs $85 mln vs. $79.24 mln cons.



Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: LVS, WYNN, VMW, JASO, FSLR, WFR, TSL, DF, MHS, SPWR, STP, ASTI, ESLR, PCLN, MRK, XLF, C, HOLX, DGX, AKAM, NYX, MDR, DSTI, ITE, SHY, MSFT, INTC, EMC, ORCL, XLV

Some bearish trade or investment ideas: MMM, SPF, BZH, HOV, GOOG, WM, CSIQ, SCUN, PEIX, JBLU, AMR, DAL, QQQQ, NDX, JBUX, WMT, JWN, UA, AEM, CREE, JOE, SLAB, VLO, CAT

Workin' for the weekend, Minyans! Be safe and have a good one!

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No positions in stocks mentioned.

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